The Virtues of Capitalism

Paul Johnson, 01.25.12, 06:00 PM EST
Forbes Magazine dated February 13, 2012

Americans are facing what is likely to be a bewildering election year, and it’s important that they keep in mind what this election is all about.

Choosing a President is the most vital act every U.S. citizen of voting age is called upon to perform. An American President is invested with truly awe-inspiring powers; therefore, the search is for a person of exemplary character who can be relied on to make the right decisions, not only on issues already before us but also on those unknown problems and events that will emerge over the next four years.

A successful President has certain simple yet definite characteristics. First is the ability to be decisive, to make clear decisions—often quickly and under pressure—on complex issues that he or she must then be able to present to the nation in terms it can grasp. Ronald Reagan had this power to an unusual degree, as did his colleague in Britain, Margaret Thatcher. It was one of the reasons they were able to form such a successful partnership.

Second, a President must possess two or three core beliefs that center on the nature and limits of government—what it ought to do, must do and should avoid doing. In an ideal world government would do only three things—and those because no one else can: run external defense, keep internal order and manage an honest currency. In the real world, however, government must perform many other duties. Yet the more it takes on, the less likely it will perform the three essentials adequately. A good President remembers this always.

Third, a President must be able to convey reassurance. Americans ought to be able to trust their President. George Washington had this gift; most Americans not only trusted him to do the right thing on their behalf but also saw him as a parental figure, exercising a form of authority that sprang from nature as well as from his election.

It would be absurd to expect the electoral system to produce a father figure every four years. It is the nature of politics that every President falls short of the ideal in one or another of the qualities described here. But it would be hard to think of anyone else so lacking in presidential essentials as Barack Obama. Indecisive and dithering, Mr. Obama doesn’t seem to possess fundamental beliefs of any kind. His central conviction, insofar as he has one, is that government will provide the answers to the nation’s problems, big or small. But there’s no evidence that he’s devoted any profound thought to how an Administration that took charge of everything would be able to function, let alone pay for everything.

What Americans ought to be looking for in Obama’s replacement is someone who can redefine, in contemporary terms, what the essential features of the American system at its best are.

The economic crisis that began in 2008 and has continued with no sign of healing is essentially a crisis in the banking system. Since the days of President Andrew Jackson in the 1830s, Americans have been suspicious of bankers, especially when they’re seen to be running the economy. This is certainly what they were doing during the first decade of the 21st century, and some kind of breakdown was inevitable.

Banks are important, and the smooth flow of financial resources from them to the rest of the economy is essential for an economy to function successfully. But banks must be subservient to the economy as a whole and should never be in a position to dictate terms or put their own special interests first.

The heart of the U.S. economy is the provision of goods and services. These must be in adequate supply at highly competitive—in terms of the rest of the world—rates and in forms that are innovative, efficient and reliable. This year’s election provides an excellent opportunity to redefine and present this message with a clarity and force that will strike home with the voters.

This is not to say that the job of the U.S. government is to shape and run the nation’s economy. Far from it. Government’s job is to make it possible for the economy to run itself, in the interests of all its components and to the benefit of the American people, whether they be producers, suppliers or consumers.

What government must ensure is that the distortions in the system that produced the 2008 economic crisis cannot be repeated and that the hijacking of the economy by irresponsible and reckless bankers does not occur again.

These are some of the themes that should dominate discussions during this year’s election. Indeed, if we want to encapsulate what the election should be about, it’s this: the reeducation of the American people in the virtues of capitalism.